- Associated Press - Tuesday, November 30, 2010

RALEIGH, N.C. (AP) - Two trial court rulings have left a ban on electronic and computer-based sweepstakes machines in North Carolina largely intact, meaning games that have the look and feel of video poker and other casino games will have to be unplugged by Wednesday.

Some operators of sweepstakes parlors, however, say one ruling left the door slightly ajar for them to continue offering a version of the games, and legal appeals may be ahead. It wasn’t immediately clear how the law, one of nearly a dozen taking effect Dec. 1, will be enforced.

Wake County Superior Court Judge Paul Ridgeway dismissed Monday a lawsuit filed by an amusement machine company and upheld a law passed by the General Assembly in July designed to eliminate video and Internet-based sweepstakes games. Lawmakers argued the games were illegal gambling even though customers buy Internet or phone time or office services first before playing games on a computer that reveals potential prizes on a monitor.

Ridgeway also lifted an injunction preventing state agents and police from seizing the machines under a 2008 law designed to close a loophole in the 2007 ban of traditional video poker machines.

But Guilford County Superior Court Judge John Craig said last week a portion of the sweepstakes ban was too broad and violates free-speech protections in the First Amendment. He suggested games specifically identified and designed to look like video poker, craps, keno or other games were subject to the Dec. 1 ban, but others designed to be nabbed in a catchall provision might not be.

Chase Brooks, president of the Internet-Based Sweepstakes Organization, which represents video and Internet-based sweepstakes operators, focused on Craig’s decision. The group wants the General Assembly and Gov. Beverly Perdue to legalize video poker machines again and regulate them, reaping hundreds of millions of dollars for the state. Some operators argue they’ll find technical ways to get around the new law.

“There is a lot of ambiguity still in the marketplace and that needs to be addressed. Many Internet sweepstakes owners believe they will continue to be operational and continuing business on Dec. 1,” said Brooks, who runs sweepstakes parlors.

Sen. Josh Stein, D-Wake, who shepherded the ban through the Senate this year, praised Ridgeway’s ruling and said hundreds of outlets statewide better stop offering the games come Wednesday or face criminal sanctions.

“The Legislature spoke loudly and clear that North Carolina does not tolerate Internet sweepstakes casinos,” Stein said. “What these casinos offer is a form of video poker.”

Sweepstakes machine operators argue the games are entertainment, not gambling. Consumers who visit sweepstakes parlors or convenience stores buy a product that gives them the opportunity to uncover potential cash and prizes with a few mouse clicks on a computer screen that resembles a casino-style game. Retailers or standalone parlors make the payouts. Opponents argue players waste their money and get addicted to the experience.

Richard Frye, owner of Sandhill Amusements, which sued in Wake County court, sets up sweepstakes machines in convenience stores and bars as a way to market sales of long-distance phone cards. He said Monday he expects to file an appeal but for now is preparing to turn off his machines by Wednesday’s deadline.

“The rest of this day and tomorrow my crew will be shutting down our route,” he said.

Noelle Talley, a spokeswoman for Attorney General Roy Cooper, said state attorneys had yet to receive Craig’s ruling in writing and couldn’t say how the state would advise local and state officers on enforcing the law. Cooper has supported the sweepstakes ban, Talley said.

The measure now would make it a misdemeanor for anyone to operate a game, although repeat offenders could face felonies and prison time. Lawyers representing the state said Monday in court the law doesn’t apply to arcade games and marketing games by retailers that require the consumer to type in a code at a company’s website because they don’t fit the definition for electronic sweepstakes games.

Other laws taking effect Wednesday will:

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